Famous for the high dividends they distribute, CRI FIIs (certificates of real estate receivables) embody a risk often ignored by investors. A quick reading of the funds’ management reports, however, can increase the security of the shareholder and provide an easy understanding of the portfolio’s operations.
The theme was featured in this Tuesday’s edition (21) of League of FIIswhich has a presentation by Maria Fernanda Violatti, analyst at XP, Thiago Otuki, economist at Clube FII, and Wellington Carvalho, reporter at InfoMoney. The program also had the participation of Evandro Buccini, partner and director of Credit, Fixed Income and Multimarket at Rio Bravo Investimentos, who spoke about a recent problem in a CRI in the portfolio of two funds of the manager.
CRI is a debt security used by companies in the real estate sector to raise funds in the market. In practice, companies “pack” future income they have to receive – such as rents or installments for the sale of apartments, for example – in a security (the CRI) sold to investors. In general, the paper includes a fixed yield and the correction by an indicator, which is usually the CDI rate or the IPCA.
In the case of the Rio Bravo funds – Rio Bravo Crédito Imobiliário High Yield (RBHY11) and Rio Bravo Crédito Imobiliário High Grade (RBHG11) – the debt installments referring to the months of January and February of CRI New Village were not paid, which motivated the anticipation of maturity and, consequently, the execution of the security’s guarantees.
Faced with the repercussion, Felipe Ribeiro, director of alternative investments at Clube FII, who also participated in the League of FIIshighlighted five pieces of information that the quotaholder of receivables funds can seek in management reports to understand and even reduce the risks of the investment portfolio.
“The small investor, who seeks more information about the fund, does not have easy access to the portfolio managers and the management report is the only tool that provides details of the operation”, says Ribeiro. “If the manager does not participate in lives and the fund does not have a management report, do not invest in the portfolio”, defends the specialist, who is also the author of the book Definitive Guide to Understanding CRI FII.
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According to Ribeiro, the first information that the investor of a CRI fund should observe in the management report is the participation of the CRIs within the fund’s portfolio. The high concentration of a security can increase the risk of the portfolio, points out the expert.
“Imagine if a CRI represents 10% of a fund’s portfolio”, he suggests. “In the event of a problem with the title, there will be an impact on the fund’s income and, consequently, on the distribution of dividends”, he warns.
Ribeiro explains that the information is easily found in the management report, in the column that indicates the percentage of CRI in the fund’s net equity (PL). In the case of Rio Bravo Crédito Imobiliário High Grade, the CRI New Village represents 4% of the PL of the portfolio.
Ribeiro recalls that, according to the regulations of the Securities and Exchange Commission (CVM), a CRI can represent a maximum of 10% of the PL of a receivables fund.
Quota value matters
The ratio between price and book value – measured by the P/VPA indicator – is essential for the analysis of real estate receivables funds, points out Ribeiro.
The closer a fund’s P/VPA indicator is to 1, the closer the share is to its fair value. An indicator above 1 signals that the stock is trading at a premium and, below this level, at a discount.
Regarding CRI FIIs, Ribeiro recalls that the share price tends to return to the book value price. Buying the paper at a big premium, he explains, could create discomfort in the future.
“If you are buying a share with a P/VPA above 1.3, there is a very strong tendency for the quote to return to fair value and the investor to have reduced equity”, he predicts.
Ribeiro recalls that there are funds, launched in 2011, whose quotas are currently worth R$ 100, the same value as the launch of the FII.
Concentration of subordinate CRIs
CRIs are also divided into series – subordinate, mezzanine and senior – that indicate different levels of risk and return. While senior series bonds offer more security with lower yield, subordinated bonds have a higher yield with a higher risk.
“A high concentration in subordinate CRIs is a kind of certificate in which the investor recognizes that part of the CRI portfolio can be a problem”, says Ribeiro, who recalls that the information is also part of the management reports, as indicated in the document released by the fund. Hectare (HCTR11).
According to Ribeiro, the funds that generally have subordinated series are exactly those classified as high yieldthose who offer greater risk in exchange for greater return.
Pay attention to the rate of return with dividends
The rate of return with dividends (dividend yield) is one of the main indicators observed by real estate fund investors. Ribeiro, however, suggests even greater attention to the indicator signaled by management reports.
He explains that the number inserted in the documents is just a reference as it considers a quote that hardly represents the investor’s purchase price.
“The shareholder needs to have this control”, says the specialist. “What you need to do as an investor is calculate how much the fund paid in dividends on top of its average price”, he guides.
Beware of FII leverages
Felipe Ribeiro’s last tip, from Clube FII, for investors in CRI real estate funds deals with what the market calls leverage.
In this type of operation, which works as a kind of debt issue, the fund offers one of the portfolio’s CRIs as a guarantee to raise funds in the market. Usually, the money obtained is reinvested in another CRI.
In addition to the possible increase in portfolio risk, Ribeiro also calls attention to the fact that the legislation on leverage is still not very clear and, therefore, investors should be aware of the issue.
“It is a risk because the CVM has not yet taken a position on the matter and at any time an unfavorable decision to the funds carrying out the operation may be announced”, he concludes.
Check out more reviews and tips on CRI FIIs in yesterday’s edition of League of FIIs. produced by InfoMoneythe program airs every Tuesday at 7 pm on the InfoMoney on Youtube. You can also review all past edits.
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